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ARCHIVED DISCUSSION FROM 12/28/1999 All times are U.S. Mountain Time View Yesterday's Discussion. Peter Asher (12/28/99; 23:41:46MDT - Msg ID:21762) Reminder We're just a long hour away from London trading for the first time since Friday, Will the big guys accumulate, write short paper or play arbitrage with NY? If this uptrend continues with all markets open, Then we and they are singing the same Millenium tune.Got Harmony? Peter Asher (12/28/99; 23:34:16MDT - Msg ID:21761) elevator guy (12/28/99; 21:22:24MDT - Msg ID:21756) If the crude delivery sytems go down and the refineries stay on line crude will go up. If the refineries crash and the crude can't be utilized thn crude could tank (Pun stumbled into)Either way gasoline futures should really explode (Yeah I know) but they're paper and could burn up. (Uh huh, it's a compulsion).Gold covers all bases on this. No leverage in physical, but the more leveraged a position is, the greater the chance for default in a systemic meltdown! Peter Asher (12/28/99; 23:08:52MDT - Msg ID:21760) Beesting Your reply to Holtzman regarding inherited wealth, brings up an experience that has been on my mind of late. It's a tale of forks in roads, and different perceptions, even in what appear to be similar subcultures.Back in the West and then East Village cultures circa 1962-6, I had discovered first Ayn Rand and then Henry George and been thrust out of 'sheeple think' by their philosophies. I had a neighborhood friend who was a freelance writer and we engaged in various conversations on sidewalks and in bank lines. I was to call her for a first date when she returned from the holidays but between Christmas and New years I met Robin and we remained only casual social friends.I5 years later I had a carton full of notes for a planned book on economics I was calling "Serfs and Lords." It was a concept that nothing much had changed over the centuries other than the fact that the Serfs were more affluent along with their Masters and had more (Percieved) freedom. I called it "Neo-Feudalism," Meaning that the wealthy still built their affluence on being in a position to extract substantial portions of production from the producers. The power of the feudal lord had merely been replaced by what I labeled 'Predatory Capitalism'. This was not a subject that I could really find anyone to debate with, even in the alternative cultures of Marin county.My old friend had now become famous for writing a book on the life phases of the human condition and as she was living in East Hampton, to where I had just relocated for a construction project, I felt she would be ideal to test out my theories with. What happened was that she only could see what you and Holzman were talking about. She insisted that things were not at all similar as we no longer had the chain of inherited wealth. I was terribly unable to think on my feet with my new theories, and was unable to get across that the chain of inheritance was not the point. That economic power over others is just that, by what ever means it is brought about.Since her latest book came out, however, I realized that anyone who would think that Hillary was God's gift to the American people, would probably have trouble comprehending the truth about man's economic power over man. Your comments tonight have me thinking she may also have been blind-sided by a cultural prejudice,Nevertheless, it was a good lesson. I had thought that if one was famous and successful in an area, that they would comprehended it. That if one was a successful writer/philosopher they would follow the logics of a philosophy. It was a set back at the time as I saw myself as an economic wannabee Craftsman, trying to preach a singularly perceived truth to the world of Intellectual Elite. Life went on and as I developed my concepts I felt sure again. But (And this is also why I tell this tale tonight) it was only when I could brainstorm and debate on this Forum these 14 months, that it all came together as self explicable knowledge. We do feed each other upward and onward in our awareness.Got thoughts? beesting (12/28/99; 22:18:36MDT - Msg ID:21759) Hi SCRAPPY. The message I got from Mr. Holtzmans post was this;The Rothschilds are represented by an unstopable wealth train coming in your direction.You have 3 choices;1.Get out of the way of the wealth train, and go about your business, a little upset that the train was so close.2.Walk in front of the wealth train because you wern't paying attention.3.Hop on the wealth train because you want to be a part of it.Obviously,if your buying Gold you're already on the wealth train because Gold is the ticket to get anyone on it.If the Rothschilds have somehow caused the present low price of Gold and at some point in the future Gold skyrockets, wouldn't you be grateful to them for giving you this buying opportunity?This is the way I look at it;If a family is wealthy enough they can hire a body guard.If their wealthier than that, they can hire a lot of body guards.If their wealthier than that they can hire an army.How can a person get wealthy? How did the Rothschilds get wealthy? Answer--Thru the accumulation of Gold.Those in the know....buy Gold....beesting. elevator guy (12/28/99; 21:29:46MDT - Msg ID:21758) Whoops! So TC posts while I'm tip tapping away!Its kind of like bringing your yo-yo to school for show and tell, and somebody else brings in their Dads chrome-plated-space-rocket-looking-laser-thingy.Oh, well. -3.2 is still good news for crude longs! Vox (12/28/99; 21:26:02MDT - Msg ID:21757) Holtzman re Leap Day 00 (msg 21738) My opinion on the Leap Day 00 challenge is that it will be a non-event. Face it; the only reason the y2k problem exists is a lack of foresight. Who is going to think that their program is going to be still in use in 100 years? No one. So, the simple programming logic is just to program in a leap year every four years and forget about the rest of the details. No one is going to worry about what is going to happen in 2100........yours in health.......Vox in deserto elevator guy (12/28/99; 21:22:24MDT - Msg ID:21756) Crude and gold API (American Petroleum Institute) numbers are out, and shows a draw down of 3.2 million barrels. Y2K drawdowns continue. OPEC production cuts remain near 90% compliant.News from those familiar the oil industry, such as our distinguished Number 6, continues to sound very bullish for crude.If nothing happens on Jan 1, then maybe its a good time to exit long crude positions. Please post any news on Y2K's effects, if any Forum members hear or see of anything happening.Could this be contributing to gold's rise to $292 tonight in overseas trading?Netking, hope you sold your crude puts! TownCrier (12/28/99; 21:14:34MDT - Msg ID:21755) The GOLDEN VIEW from The Tower WOWSERS! Today the Fed functioned in one of the capacities for which the central bank was created...as the lender of last resort. This occurs when the banking system is beset with demands for reserves beyond the ability of fellow banking corporations to pull together to make it through the tough times--when they are bitten by their own curse of fractional reserve lending. Although the ill-advised fiat-currency experiment has largely eliminated the meaning of the old-fashioned bank run (the currency holds no more meaning than the ledger), this Y2K thing is a new sort of prospect that jeopardizes the very ledgers themselves, rendering the limited quantity of currency as potentially superior. Suddenly a bank run for the physical currency becomes meaningful again after all these years...who'da thunk it?So with that as background, we've watched the Fed supply the banking system with additional reserves daily throughout the past year. The size of the added reserves have generally increased steadily in size as the year wore on, but now in this last week we really see the Fed turn up the juice. Anyone with a good memory will recall us reporting on the assortment of forward repurchase agreements the Fed had arranged earlier to be taking effect this week. Keep that in mind, because on top of those the Fed today added an eye popping, wallet busting $15.03 billion via 6-and 7-day repurchase agreements to help banks maintain their minimum reserve requirements of cash. As ever more banking customers withdraw (or spend) their deposits, the banks are temporarily selling their various non-cash assets to the Fed in exchange for the needed cash funds. The Fed holds the collateral (Treasury and agency bonds and mortgage-backed securities) and the banks' promises to repurchase their collateral (with interest) at the designated time...assuming they are able. Today's $15.03 billion was comprised of $8.005 billion in 7-day repos and $7.025 in 6-day RPs.GOLDWe touched upon the Y2K-inspired separation in hierarchy between physical cash "money" and bank entry "money" in the discussion above (normally they would be seen as equals...equivalent paper-based units of account. It would only be proper for us to round out this commentary on monetary hierarchy by reminding the reader that it is none other than our trusty gold that holds the top position...Y2K or not, gold is the king of all things monetary.The gold markets remaind subdued due to the London Bullion Market remaining on holiday. They will be back at it tomorrow. Gold continued its trend higher today in those markets that were open, and spot gold was last quoted in NY at $289.30, up $1.80 from yesterday. COMEX traders swapped their derivatives back and forth in such a manner that demand for the February futures contract raised the price by $1.70, closing at $291.50 in a range that briefly visited a dollar higher than that -- a one-month high.Leonard Kaplan, chief bullion dealer at LFG Bullion Services said to Bridge News in regard to gold's rise, "it's hard to tell whether it's Y2K short-covering or end of year 'let's close the books' book-squaring. The funds tend to lighten the books at this time of year and it's still perhaps in some people's minds that there's the odd chance something could happen and they decided to cover."The European Central Bank released their weekly financial statement, confirming that their official gold assets had declined by €91 million on the sale of 10 tonnes of a member central bank's gold (which we all know to be part of the Dutch sales through the BIS...though each individual "sale" is not pre-announced.) You would think that traders would eventually draw the rational conclusion that these sales of real gold are being absorbed despite the curious nature of the sale in which potential buyers are not being conspicuously solicited. Further, that the gold is being absorbed easily without causing any softness in the physical market. In fact, the price has been climbing. At what point will the traders realize that the notion of a world someday "awash in CB gold" is a complete fallacy for trading purposes?A FWN report stated that a trader suggested that there was little price reaction to the news of this latest gold sale because the Dutch central bank had already announced the full extent of their gold sale program. He said, "I think that the funds just wanted to get out of their shorts and this Dutch sale seemed to have no affect on price."Today marked the Termination of Trade on the COMEX December gold futures contracts, with tomorrow being final notice day for delivery intentions. As of yesterday's trade, open interest on the December contract had been reduced to 24 positions. Today, ten of those received notice for delivery, bringing the total due to switch hands by Thursday to 8,294 contracts'-worth of gold...829,400 ounces in all. Toward that end, we'll pass along what our scout discovered in Manhattan today...there was no visible movement of gold at the COMEX depositories--where reported inventory stands at 1,220,121 ounces, approximately 90% of which is registered gold, 10% eligible.OILCrude futures gained on NYMEX trade under expectations that forthcoming data would reveal stockpiles to have declined last week. February crude gained 49¢ to $26.82 per barrel by the close of trade. The subsequent release of API data confirmed traders' suspicions, showing a drawdown in U.S. crude stocks for last week of 3.2 million barrels. In afterhours ACCESS trade February futures promptly tacked on another 18¢ to bring the contract price to an even $27.And that's the view from here...after the close. Scrappy (12/28/99; 20:46:16MDT - Msg ID:21754) beesting, Mr. Holtzman If I may, The problem is this. Imho. The decisions made by the rich and powerful DO affect my life, and they do not consider my life when they make their decisions. They consider their fortunes., not mine. My life is just as valuable as theirs is, but if it comes down to it, the Rothschilds will protect their excessive fortunes long before they let me eat. They will eat and live well, while my children are cold and hungry. If the decision comes down to this, that is the choice they will make. Who ate during the depression? Who was hungry? What caused the depression? beesting (12/28/99; 20:19:25MDT - Msg ID:21753) Response to Mr. Holtzman's msg.21736. Mr. Holtzman, a wonderful thought provoking post with much food for thought.I would like to comment, as a third generation American with imbedded roots in The Scottish Highlands, if I may.<Your post:Who's afraid of the Big Bad Rothschild?One thing I don't understand, is why so many posters here dread the actions of the rich and powerful.>My response:Mr. Holtzman, I'm going to assume you didn't receive your early education in the United States, because there is a very basic difference in U.S.Educational systems and non-U.S. systems which may account for what non-Americans may call brashness in Americans,and in most cases they are right.From:THE UNITED STATES DECLARATION OF INDEPENDENCE:Action of Second Continental Congress, July 4, 1776.(The unanimous Declaration of the thirteen United States of America.)Second paragraph:""We hold these truths to be self-evident,--THAT ALL MEN ARE CREATED EQUAL,that they are endowed by their creator with certain unalienable Rights,that among these are Life,Liberty,and the Pursuit of Happiness""---etc. etc....end.My comments:Most Americans are taught to visualize a new born baby when reading the above statement.ALL MEN CREATED EQUAL!With that concept in mind--Bill Gates looked just like me!President Clinton looked just like me! And, a Rothschild baby or a baby of Royal Bloodlines looked just like me!!!So, In My Opinion, this is the basic difference--There is no preconceived distinction of a person born in the U.S. to be of any higher standing in society, than any other person born in the U.S. at the time of birth.Although naturally, economic factors create a huge difference soon after birth.How does the above affect American thinking later on in life?Well, many people have a tendency to be envious or jealous of other people that seem to be privileged,therefore it's part of an Americans culture to poke fun at,question, or sometimes even ridicule, ones that seem to have a higher status in life then oneself. Another factor about the Rothschilds, which is different. In the U.S.,tremendous wealth or fame, usually brings public unavoidable attention from the news media, Elvis along with Howard Hughes in later life, lived a life of seclusion because of this.The Rothschilds are so low profile, most Americans have not heard of them.Those that have are suspicious, simply because no-one seems to know their present or future business plans.Mr. Holtzman, to this point in time no one has given a logical answer to the BOE's on going sales of Gold currently happening.Why would prudent Bankers in charge of a Country's Banking system deliberately take a huge loss in the sale of assets? If the Gold sale was conducted in the normal fashion a $40 to $50 per ounce profit would have been achieved.What really surprises me is how the English public accepts this on going event.Many feel Rothschild influence in high places in England effect not only English citizens,but citizens all over the world, hence the interest from American Goldhearts.Maybe time will answer this question.Well, thank you again for all your posts, keep them coming. My post was not meant to be critical, only to give a better understanding of the American thought process.....beesting. Leigh (12/28/99; 20:15:43MDT - Msg ID:21752) FOA Hi, FOA! I have a few questions to ask, and I hope you don't mind if they seem to cover old ground. I'm trying to clear up some fogginess in my understanding. First, regarding the proposed three world currencies -- will they be gold-backed (like the Euro), based on a true gold standard, or backed by nothing at all? Will the three currencies compete against one another? Do you think that eventually the three currencies will merge into one world currency?Also, you've mentioned about digital money, and I assume you mean that a gold owner's gold is placed in the bank and he can draw upon its value. What if the gold owner (or cash owner) doesn't trust the bank or the government to take good care of his money? Could he refuse to use the smart card and function on a cash basis?Thank you. I hope you and all our USAGOLD "family" had a very happy Christmas. Scrappy (12/28/99; 20:12:06MDT - Msg ID:21751) Blessings to you all, and Thank You. It is indeed, the last days before the infamous 'rollover'.Soon, I will know if my plans for both protecting my small family, and having a seed for my childrens' future, have been laid the best way possible. Oh, how I have vascillated between, "Should I take everything and buy more rice?" and "Stupid, foolish, over-reacting, me. All these 'preps' could've been a few more ounces of gold, which could have been another YEAR of college for somebody, if the price takes off!"While I think it entirely possible that things could quickly tumble way, way, down, I am not afraid. Partly, I feel no threat anymore. Partly, I'm kind of 'on hold'. Nothings' seemd to matter lately, except waiting to see what's going to happen this next year. WIth any luck, I'll be eating many, many pounds of rice, while my children tease me as they munch their pizzas. I hope so. If life goes on as 'usual', I want you all to know that because of the education I've recieved here, I will be a 'goldbug' for life. My eyes have been opened, and my retirement fund will consist of small, but steady accumulation of physical gold. Naturally, I don't expect to begin this fund for at least another four years, (Bachelors' Degrees of the off spring attained). But, I will continue to lurk and learn, and as soon as my feeble brain feels like it might have something to contribute, I will. Considering the awesome company here, I sort of doubt that will happen any too soon. If, on the other hand, civilization falls, let it be known that I will be selling Chocolate-rasberry tortes, ala the Sacher of Vienna recipe, two for a one-tenth ounce gold coin, or will barter for any food that isn't rice...:} (Gandalf, do you suppose that's a fair price for the finest choclate cake in the world?}Thank you all for the education, the companionship, and the moral support in this time, which has proven to be one of the loneliest of my life...(Thank God or the powers that be or whatever you believe in for your spouses, people...even if they've disagreed with you, they've been there, and that means a LOT)Whatever happens this next month or so, I will be praying for us all...With gratitude, love and prayers, for your families, for the future....ScrappyOh, yes, happy holidays, whichever ones you celebrate whenever it is you celebrate them.. The Believer (12/28/99; 19:32:40MDT - Msg ID:21750) Well...? Here we are friends. The time has come. The markets have not sold off as many people expected. I must addmit, I am one of the folks that thought we would have a sell-off towards the end of December. 'Ol Greenspan has done his work well. Markets at new highs.Gold under $300. What more could the Bulls ask? So now we wait for the fuse to be lit. And hold our breath for three months. By then we will surely know if deliveryproblems will show up. Tax collection,POG,Bonds,Techs,Electricity, all is finallyto be decided. Happy New Year to you all. The last couple years on Kitko,Gold-Eagle and USA Gold have been an education. The culmination of all thought and expectation may be at hand. Personaly, I hope so. Peter Asher (12/28/99; 18:49:16MDT - Msg ID:21749) Blow-off Top Theory: More people have more stock profits than ever before.As the year-end gets closer, and there is less time left for a correction, more people hold on to their stocks,waiting to take profits in the following tax year.This quantity accelerates as year-end approaches, creating an ongoing decrease in stocks supplied for sale. The constant influx of 401-k etc. funds propels that reduced supply to higher prices.That price surge draws ever larger quantities of funds into the euphoria driven fray.The surge continues onward until ----- Monday 1/3/00, when the waiting sellers begin to act, just as the financial industry will hit the point of maximum incidence of as yet unknown computer failures. Even without a Y2K calamity, this may be a historic day.Got Puts? JCS (12/28/99; 17:24:19MDT - Msg ID:21748) Mr Gresham (12/28/99; 9:32:49MDT - Msg ID:21739) Thanks much for your reply.Being a "Believer" I have a tendency to look at Y2K as an unsolvable situation that will usher in the "man of perdition" who will have all the answers and a way to fix it, while building a New World Order at the same time.Needless to say, we live in interesting times. JCS (12/28/99; 17:20:34MDT - Msg ID:21747) CoBra(too) (12/28/99; 16:28:23MDT - Msg ID:21746) Just more Biblical prophecy being fulfilled.Perhaps we are closer to the end than most want to believe?! CoBra(too) (12/28/99; 16:28:23MDT - Msg ID:21746) Bitter Irony- Just days before Y2K the most devastating gale force (12 on the Beaufort scale) - dubbed "Lothar" ripped through Europe and flattened almost everything in its path and reaping havoc in in its wake, leaving the power grid, century old forests and homes in shambles. The death toll in hardest hit France is over 70 and counting today's second - and as bad a storm in Southern France and Spain and about 120 in all areas affected. Floods again in the Mosel/Rhine area and unforseen heavy snowfalls in Switzerland, Bavaria, Austria and the Balkans, bringing traffic, including public transport to a real, not virtualstandstill.Chirac, talked about his country as being severely crippled and asked for technical help in rebuilding the power grid.IMHO, the real scary part is France is about 75% (I think) dependent on nuclear power. And that is not a very comfortable thought while all hands are needed to control the natural disaster, the potential man made disaster of Y2K is upon us. Bitter, but scary irony. As my area in Austria was probably the most severely hit by the storm, though luckily without fatalities, the electricity was down for about 8 hours - Sunday afternoon with about 18 people for dinner, followed by ice rain and now tons of snow - 12 avalanche fatalities only today in the Tyrolian Alps.(Otherwise, thanks to "Lothar", we'll have more than enough firewood for years to come, providing availability of gas for the chain saw).The spinmeisters of the new paradigm of technological advancement, in all facets of the globalized? (- and that's really cynical)economy, based on counterfeit fiat currency have proven that they are able to rape, oppress misuse and possibly destroy nature, but can't ever control nature. The question becomes more pressing now, for how long will they be able to control the sheeple and do they control their technology? We may find out soon enough - and who will then have the need for all the sevice industry, built up over decades for the comfort of the decadent, when barter for real goods will only be available for real money - gold - and not for "virtual" promises anymore?Have a happy, healthy and golden 2000 -CB2 to I can relate to to the Journeyman (12/28/99; 13:28:55MDT - Msg ID:21745) Who's driving? Let's not over-estimate the power and ability of the FED,etc. WHAT EVER is about to happen (if anything) isn't underanyone's control:"That we, meaning the monetary authorities, the Fed and theTreasury, can somehow alter the value of a currency in asignificant manner when fundamentals are going in theopposite direction is an illusion. We cannot." -AlanGreenspan, Semi-annual Humphrey-Hawkins Testimony to USHouse, July 22, 1998, 12:52 PM EDT"Unfortunately monetary policy is not possible withoutforcasts. There are no mechanical rules we can follow inmaking these forcasts. I wish there were, but there justaren't. Even when we get a large number of forecasters andthey all more or less agree, there's no guarantee they'recorrect. After all, we're all looking at the same data. Imean, this isn't a coin toss operation. We're right about60% of the time." -Federal Reserve Chairman Alan Greenspan,March 13, 1991 22:00 - 22:30 pm. Secretary of the Treasury Lloyd Bentsen and Laura D'Andrea Tyson of the Council of Economic Advisors both refinanced their houses with VARIABLE rate mortgages when FIXED rate mortages were at their lowest rate. If they'd known what interest rates were going to do, they could have saved themselves a lot of money by getting fixed rate mortgages instead! "Does this make you feel any better about sending your tax dollars to Washington?" -David Brinkley's tag line, ThisWeek with David Brinkley, 4 Dec 1994 ~11:59:00 AM EST "As I indicated to you earlier, the crisis that emerged inSoutheast Asia was not forecastable and indeed as it beganto evolve, the extent of how deep it would become was alsonot forecastable." -Alan Greenspan, Semi-annualHumphrey-Hawkins Testimony to US House, July 22, 1998,11:47am "Congressman, it's very difficult to evaluate potentialhypothetical events without fully grasping all thecomplexities of what they are, when we make policy. I'vetended to stay away from trying to project what we might ormight not do under certain hypothetical cases because I'vefound that over the years that when those cases actuallyemerge, they look quite different from the way I thoughtthey would. And I think the reason is that we have such anextradonarily complex economy that it tends to do thingsthat surprise us more often than not." -A.G. Semi-annualHumphrey-Hawkins Testimony to US House, CNBC, July 22, 1998,11:57am [1:10:50] James Dale Davidson & Lord William Rees-Mogg: This view [that the world economy still faces a second and deeper stage of depression to come] may seem extreme and unwarranted. But exactly the same thing would have been said in 1930. The leading economists of that day saw no hints that the economy was about to take a deep dive. It would be easy to assume that this failure to forecast was due to a lack of knowledge that economists now have well in hand today. Not so. In fact, even contemporary mainstream economists, using current forecasting techniques, were unable to predict the 1931 downdraft retrospectively. This was reported in an atricle published in 1988 in The American Economic Review. -James Dale Davidson & Lord William Rees-Mogg, The SOVEREIGN INDIVIDUAL, (New York, NY: SIMON & SCHUSTER 1997), p.17 & 18 At the end of 1929, the New York Times looked back on the year to identify its biggest story. It was Admiral Byrd's trip to the South Pole. ... The smartest reporters in the world could not see the importance of the stock market crash in 1929. ... The economy had already turned down in August 1929. It was many months later, after the crash, after the Suckers' Rally, after a slow year with no recovery, after the banks started to collapse, that people began to realize what had hit them. By then, it was too late to prepare adequately. + ... Even recognizing that a slump is underway is often beyond the vision of the authorities. Consider that the 1973--75 recession began in November 1973, but, reported the Wall Street Journal, "as late as August, 1974, Arthur F. Burns, the Federal Reserve chairman, was assuring Congress that the economy was still expanding. -James Dale Davidson & Lord William Rees-Mogg, The SOVEREIGN INDIVIDUAL, (New York, NY: SIMON & SCHUSTER 1997), p.375 "We live in what is, for the most part, a stable economicsystem... But from time to time, this process has brokendown as investors suffer an abrupt collapse of comprehensionof, and confidence in, future economic events. It isalmost as though, like a dam under mounting water pressure,confidence appears normal until the moment it is breached....History tells us that sharp reversals in confidencehappen abruptly, most often with little advance notice. These reversals can be self-reinforcing processes that cancompress sizable adjustments into a very short time period. + We can readily describe this process, but, to date, economists have been unable to anticipate sharp reversals in confidence. Collapsing confidence is generally described as a bursting bubble, an event incontrovertibly evident only in retrospect." -Federal Reserve Chairman Alan Greenspan, "New challenges for monetary policy," Jackson Hole, Wyoming August 27, 1999, <http://www.bog.frb.fed.us/boarddocs/speeches/1999/1999 0827.html>Bubble Report:The Consumer Confidence Index for December rose to 141.4,the highest reading in 34 years. -CNBC, 12:32 PM 12/28/1999 The Dow gained 81% in 1915. The NASDAQ it now up 82% so farthis year, making it the best performance of any stock indexever. -CNBC, 2:04 PM 12/28/1999 Regards (and good luck),Journeyman Gold Dancer (12/28/99; 13:12:42MDT - Msg ID:21744) FARFEL:A scam is always a Scam I agree a scam is always a scam and have wondered about the same thing as you. Why not the gold stocks also? Let me suggest why this scam is even bigger than it appears. Amazon.Com raised a lot of money in the IPO market. And what did they do with that money? They spend most of it. Where? ON ADVERTISING. Which means that "the media" got the money. Most of the Internet stocks are doing the same thing, spending millions and millions on advertising. SO THAT IS WHY CNN ETC HAVE BECOME THE CHEERLEADERS FOR THE HIGH TECHERA. THEY ARE THE BENEFICIARIES. REMEMBER THE SAYING "FOLLOW THE MONEY". IT IS AS TRUE AS EVER. High tech boom? NO. It is an advertising boom. The media is making the money not the high tech or internet companies. So this takes a hugh amount of resources and instead of building a plant to make goods to pay off the trade deficitwe spend it on advertising and hype. And the debts keep increasing. Gold can't be far behind but it will have to wait for investor intelligence to surface. Don't now when that is going to be. Gold Dancer Gold Dancer (12/28/99; 13:12:09MDT - Msg ID:21743) FARFEL:A scam is always a Scam I agree a scam is always a scam and have wondered about the same thing as you. Why not the gold stocks also? Let me suggest why this scam is even bigger than it appears. Amazon.Com raised a lot of money in the IPO market. And what did they do with that money? They spend most of it. Where? ON ADVERTISING. Which means that "the media" got the money. Most of the Internet stocks are doing the same thing, spending millions and millions on advertising. SO THAT IS WHY CNN ETC HAVE BECOME THE CHEERLEADERS FOR THE HIGH TECHERA. THEY ARE THE BENEFICIARIES. REMEMBER THE SAYING "FOLLOW THE MONEY". IT IS AS TRUE AS EVER. High tech boom? NO. It is an advertising boom. The media is making the money not the high tech or internet companies. So this takes a hugh amount of resources and instead of building a plant to make goods to pay off the trade deficitwe spend it on advertising and hype. And the debts keep increasing. Gold can't be far behind but it will have to wait for investor intelligence to surface. Don't now when that is going to be. Gold Dancer Farfel (12/28/99; 12:32:26MDT - Msg ID:21742) Discrimination in the New Paradigm I think the thing I find to be most amusing about today's gross disequilibrium in the equities markets (aka THE SUPER-BUBBLE) is this:Under New Paradigm logic, internet companies trade at huge multiples of revenues on the theory that, within some five years, they will be generating tremendous profits. The bigger the losses today, the higher the stock prices. The investing public is propagandized daily by Big Media as to the soundness of this New Paradigm. Utilizing similar New Paradigm logic, then one must wonder why gold stocks do not trade at astronomical prices and P/E's. After all, it is now a known, proven fact that the aggregate gold short position is astronomical in size (approaching 10,000 tons) and the new supply of gold is a mere 2500 tons per annum. So, it seems almost inevitable that the price must rise much higher in order for the gold short position to be covered. Why then do gold stocks not trade for hundreds of times their revenues, just like internet stocks? Why does Wall Street fail to properly discount the surely inevitable future surge in the gold price as investment houses send the price soaring in an inevitable gold short cover? Why do gold stocks not soar in price each time they report larger losses?It seems that New Paradigm logic should apply across the board. The exclusion of the gold market from the benefits of Wall Street's new measuring standards of value only underlines the categorical deceit behind the New Paradigm, proving once again that, although the terminology may change from one decade to the next, "a stock scam is always just a stock scam." ThanksF* Peter Asher (12/28/99; 11:49:54MDT - Msg ID:21741) Mr. Gresham You said>>>> But I think of Steinbeck's Tom Joad and his family hungry in the midst of farmers dumpingexcess food they couldn't sell for enough to meet production costs. Economics DOES matter inkeeping people alive. <<<<Yes, I culled this from some of my old posts>>>>> The driving force behind society is economics, which can be defined as the system by which is determined who gets what. It is not supply or demand that ultimately determines the workings of contemporary economic systems. Most trading activities exist solely to get the "highest gain" on capital, creating an ongoing maelstrom of buying and selling, derivative trading and corporate raiding, etc. etc. The product of all of this is who gets how much of the goods and services produced. So, we have the economics on planet Earth. Production, distribution, lending, taxation and "the dole" all become sources of entitlement. The struggle is, not just to produce, but to receive allocation. <<<<<So, in this struggle, it is perceived that to give Jim some of that food, the giver would loose value in what he has to sell. This is part of what you referred to last month in the comparison of the purchasing power in San Diego relating to the labor value across the border. This is why some of us hope that the Millennium Crisis will destroy a lot of the "Wealth Transfer" games rampant in our society. Perhaps it will again be necessary for people to actually produce something in order to get purchasing rights.Maybe Y2K will be a benevolent version of Marie Antoinette and the Guillotine. "King Billy, the People have no Stocks!" "Well, then let them have Options." Read (12/19/99; 15:50:34MDT - Msg ID:21345) , if you haven't yet, and --- I'll see you at the barricades! Peter Asher (12/28/99; 9:57:55MDT - Msg ID:21740) Holtzman You just stated somthing that could be the REAL reason that a gold and silver money standard is an anethma to the 'Puppet Masters'.>>>> were Big Mac prices to be plotted alongside silver, there'd be a very consistent long-term relationship of about half of an ounce of silver per Big Mac. <<< If I had a pocket full of half ounce silver Eagles, I would probably not buy the hamburger. I would perceive my money as more valuable and suffer through the mild hunger until arriving home and having a bowl of cereal. Fiat money trivializes purchasing power. A Bi-metallic system creates TIGHT money! Mr Gresham (12/28/99; 9:32:49MDT - Msg ID:21739) JCS -- Infomagic http://www.greenspun.com/bboard/q-and-a-fetch-msg.tcl?msg_id=002755 We all do our own y2k impact analysis based on how we see the world. Yes, he is scary. But you have to make your best guess on how you see the interconnection of systems that he is looking at.I believe that most publicly-imagined y2k alarm came from the idea of the idea of one or more life-supporting utilities (electricity, water, sewage) failing simultaneously, and the repair personnel and parts being overwhelmed or incapacitated.These early results would come mostly from the effects of embedded chips failing, but no usable odds of that have been presented. And yet most press has been about the large organization-running computer systems that programmers can code and, hopefully, re-code. It's easier to find a COBOL programmer to interview for the 6 o'clock news than an embedded systems designer. They've almost left people with the impression that their power might have failed only because the billing system had failed at the local electric company. (But of course, it's now been fixed!)Assurances were made by those utilities that remediation is complete. Yet no independent verification body has backed up these self-reportings. However, the public has largely bought these reassurances, believing that outages, if any, will be merely "local", that is, happening to someone else.We are ALL hypnotized by the January 1 date, and most of us think some version of "If I can just get through the first week, then I'll have a chance to think about the rest with more information I don't have now." It's really hard to think in two or more time-frames simultaneously, but that is the problem y2k presents us, and that is what Infomagic's extreme conclusions invite us to do.In the absence of massive First Week utility breakdowns due to embeddeds, most of us see the likely default outcome as being some degree of Recession/Depression, that is, longer-term economic fallout.Some organizations will collapse, and be done without or replaced by the survivors. Some consumer goods will be in shortage, and prices will go up despite generally falling incomes. Hard times, but "we'll get by." We're kind of exhausted by those seven fat years anyway, aren't we? These subtle mental biases in a logic-challenged populace (they still smoke and play lotteries, don't they?) kept any rational level of preparation from happening. The unknown was lazily discounted to zero.Few people conclude, as Infomagic does, that the ECONOMIC impact of y2k breakdowns will being life-threatening. His devolutionary spiral is a fascinating concept, and no amount of study at this point is going to get you to the "right answer." But it needs to be considered as a bounding concept for putting your own picture together.He depends upon the idea that most people today have put their lives in the care of a system of systems, and that a certain critical percentage lost in y2k (he says 15%) will cause the collapse of the others, until the entire modern infrastructure plunges to a bottom that is pre-20th century in sustaining human population. Say, one billion.The question here is whether the effects will indeed snowball, or whether individuals and organizations will step in to fill the gaps, finding some system of rewarding each other for doing so. What is the recovery curve? And when -- before how much has been lost -- does it kick in?We all do our own mental assessment of the two parameters of each y2k risk: Stakes and Odds.Consider two high stakes industries: Food and Oil.We've heard how computer-dependent (including some embeddeds) farmers and the food distribution system are. We know that most "Western" lifestyle humans rely on a mass industrialized agriculture where a small percentage (2-3%) of society feeds the rest. Most of us know very little about their daily work, and few of us have the knowledge or resources to grow our own food. (Most farmers have to shop for most of their food, too.)But we tend to discount the loss of most food production, because we're coming off of many "fat years" already, and most of us think we could stand to eat less anyway. Whether the industry will fall through that point of sustaining us at least minimally is an odds calculation I can't do. But I think of Steinbeck's Tom Joad and his family hungry in the midst of farmers dumping excess food they couldn't sell for enough to meet production costs. Economics DOES matter in keeping people alive.Oil has not been brought to a full analysis either, probably because of the mysteries of embeddeds, and the tight-lipped official optimism of people in the industry who want to keep their jobs.But the fact is, as you may have read from the posts on TB2000 by "R.C.racambab" [link supplied above to one of three threads by him] a journalist reporting the private opinions of his friends in the oil industry, that the industry is just rolling the dice next week. It was never anywhere near cost-effective or really possible to take apart all of their equipment to test the chips built into the wells, pipelines, and refineries. "We'll see what we see when we see it. And then we'll fix what's worth fixing, and replace or live without what we can't fix."They probably saw it as doing their remediation work after Jan. 1 (like Citicorp's $600 or 800 million in advance), because the only accurate assessment they could sustain economically could not be had beforehand. A billion here or there, that's just a cost of doing business. (And hey, if the price you're earning on your remaining oil production goes up, well hey!!!)Since they couldn't tell us what they didn't know, and might not have even if they did, they told us nothing useful. Up to us to calculate our own odds, and to think about the stakes of the loss of petroleum inputs into all of our industries.R.C.'s conclusion on odds for U.S.? "Most optimistic -- 14.6% loss of supply needs. Modest projection -- 30.0% loss of supply needs. Median projection -- 46.0% loss of supply needs. Maximum… -- 91.0% loss of supply needs. When I review the statistics for the limited testing that was done and then apply that to the overall quantity statistics that we do have, I just don't see anything more optimistic than a 14% loss of supply, although I'd apply a plus or minus range of 5 percentage points…for a minimum range of 9% to 19%."Y2k's effects may be "lumpy": a few scattered utility outages due to embeddeds, a couple Fortune 500s going under and a lot of others financing or taking small suppliers in-house to keep inventory coming, and then ONE spectacular breakdown like the oil industry that would cripple a nation that had otherwise escaped serious consequence. (The U.S. in that event would probably use its military and remaining technology muscle to move into Middle East/Venezuela to enforce a rebuild as fast as possible. Still, a big unknown how long to get back to near normal.)Early Gary North and Infomagic-type scenarios had us living in a Mad Max world where each family unit had to be self-sufficient with all food and tools and weapons needed to survive. Most of us never went that far, and have settled on the likely scenario that the worst that will happen is there will be shortages, but most necessities will come back to markets, though at higher prices.But since you never know exactly what you'll need six months or a year from now, you save money to allow your widest range of choices. Gold as money certainly covers most of the scenarios that face us.The theme that's coming to me this week from our joint explorations of gold and y2k is VALUES. That's what I sense the people on this and some other forums care about most, though they differ on some of the specifics. I think in the year ahead we are going to be challenged to remember/ discover/ learn about VALUES to an extent we've never before experienced. Holtzman (12/28/99; 9:25:58MDT - Msg ID:21738) Observations: Part Three of Three --------------Late January 00--------------As January progresses, I expect we'll see prices for gold and silver gingerly recovering to roughly halfway between their pre- and post-New Year's prices. This will happen because, after the first few days' hubbub, public interest in the metals will fade again. The downdraft in metals prices on 3 January will be driven mainly by paper trades long since established. While Spot's effect on the Street price for PM coins will be immediate, the effect on coin Availability will be delayed by several weeks. This is because most coin and wafer owners do not buy and sell on a moment's notice.Some time towards the end of January I expect, a significant number of goldbugs will begin to capitulate. Among them will be those who regarded gold and silver as an insurance policy against the small but unavoidable threat of Y2K. Now that the century date chance is over and done with, these people will have no further use for the stuff. As it was never a majority of their invested wealth, they'll accept a loss on it.A likely larger group of sellers at this time will be the latecomers to the Y2K panic party, in particular those who threw a large part of their wealth into gold just after the Washington Agreement (26 September 1999). Those who didn't see gold as a bargain at $252 in the aftermath of the BoE announcement suddenly decided in the autumn that $338 was a never-to-be-seen-again bargain price. They'll be the quickest to become demoralised as their dreams of $600 POG are dashed within the first 72 hours of 2000.Speaking of $600 POG, keep in mind that when Professor Mundell predicted $600 POG by 2010 back on 18 November 1999, he wasn't exactly going out on a limb to do so. Roughly doubling in 10 years means, once we apply the Rule of 72, an annual growth rate of about 7.2%. Better than long bonds but no glorious race for the heavens. Phrased another way, Mundell is predicting that the U.S. dollar will devalue at a rate of only about 7% a year versus gold. While that would certainly be an improvement over the previous decade's roughly 7% devaluation of gold against the dollar, it's still not all that dramatic.But back to the short term. I expect downward pressure will resume on gold and silver towards the end of January as these various groups of short-term and quick-draw PM investors unload. Rather than the single abrupt downdraft I expect on 3 January, the one at the end of January I expect will be grindingly slow and generally demoralising for those of us continuing to hold the metals. And again I say, don't sell during this unpleasant period.--------------Leap Day 00--------------The final blow to Y2K will occur on Wednesday 1 March 2000, the day after Leap Day. While the general population imagines Y2K as being solely 1/1/00, those in the know had long since identified nearly a dozen days when software was particularly vulnerable to date confusion. The last of the truly problematic dates is 29 February 2000. Everyone knows there's a Leap Day every 4 years. A much smaller number know that there is usually Not one on 00 years. But very few people know that there Is one on 00 years that divide by 400, as in 2000. The fear is that programmers failed to take note of that in their calculations.This is one I'll admit to being less confident of than others, but still not by much. I expect there may be a few bits of weirdness scattered about various industries in various countries because it'll occur midweek (Tuesday) rather than at the weekend, but I still expect it'll get sorted out without much evident fanfare. And as with the previous changeovers from rumour to news, no matter how much weirdness does result there will come a day very soon thereafter when everyone finally relaxes. On that date the long-term Y2K goldbugs will finally begin to capitulate. They'll have held off selling in increasingly desperate hope of being vindicated, only to feel in the end completely crushed. And as a result they'll sell at precisely the wrong time.--------------Don't Panic--------------The first step in avoiding a trap is knowing of its existence. The way to avoid falling into the 3 traps I've laid out above is to not allow the awful sentiment to get to you. Don't sell in panic what it took you months of prudent calculation to acquire, because at some hour of some day unheralded, something surprising will occur which will loft gold up in price again. Probably not to the skies, but probably back above the trend line. A violin string seldom makes it out of the orchestra pit, but it constantly oscillates from one extreme to another, centred on its trend line. If you're going to sell, at least wait until the oscillation is to the unsustainably high side of the trend. Don't sell at the lows.Whether you choose to buy more at the lows, to take advantage of gold and silver's returning again to the unsustainably low side of their trends, is your call. I give you the same advice I received here while I was still lurking: let your stomach be your guide as to how much hard money is enough for you. You'll feel nervous with too little, and nervous with too much, but somewhere in between you'll find a place where you feel content over the long term.In the short term, however, suppress the desire to run for the exits, especially on the grounds of making a quick profit or nimbly skirting round a quick loss, if for no other reason than that I may be completely wrong in my predictions. Please note that, right or wrong, I'm not selling my gold. That's because I don't see my physical gold as a leveraged investment on which I hope to make great profits. Rather, I see it as a safety net against a surprise collapse in one of the more popular classes of asset. This, by the way, is why I'm so blasé on Y2K. A known future event is almost never going to set off a collapse. Collapses are usually triggered by a completely surprising event.In order to protect yourself from such unpredictable surprises, it's necessary for you to do things that at first blush seem counter-intuitive. Simple case in point: let's say that back in January 1999 you bought $1000 each of Microsoft and gold. By Christmas 1999, you find your Microsoft has gained roughly 50% while your gold (despite impressive swings during the year) has by year's end gone nowhere. At first blush, you might be tempted to sell the gold and buy more Microsoft. After all, it's proven itself by far the better investment over the last year, indeed over the last two decades.But that first blush is, in itself, the trap. In particular, when something's been roaring to the heavens for twenty years, it's begging for a correction. Likewise, when something's been beaten into the dirt for twenty years, it's due for at least a mild recovery.If your reasons back in January 1999 for owning Microsoft and gold in equal amounts still remain good, what you should in fact do is sell some of the Microsoft and buy more gold to return to the 50/50 allocation. Having said that, 50% is too large a percentage for any single class of asset.The safest portfolios (and those which also maintain the most consistent long-term gains) are those which are allocated across half a dozen or so asset classes: stocks, bonds, money market accounts in more than one fiat currency, precious metals, real estate, etc.Rather than sell off your gold when these post-Y2K downward spasms arise, instead leave those investments in place and begin concentrating on the excess you have left from your paycheques. If it seems to you that your domestic fiat currency will continue to hold its own for the indefinite future, by all means hold that excess income as bank savings or even invest it in domestic stocks. If, however, you receive your paycheques in U.S. dollars and have a funny feeling that FOA and others might be correct, begin investing in foreign stocks, bonds or money market accounts in euros or yen, or even buy a bit more of the dog which may currently be biting you, precious metals. After all, it'll be biting you precisely because it'll be a bargain to buy more.The best advice I've ever figured out for myself has been 1) to identify and avoid repeating the mistakes of people who've lived unpleasant lives, and 2) to identify and emulate the successful habits of people who've managed to live happily to a ripe old age.And people who allocate their wealth across many assets have historically been far more likely to survive and thrive.--------------Portable Real Estate--------------I like to think of precious metals as portable real estate. Both gold and land must be defended. While land can be occupied, gold can be stolen. On the other hand, you can't hide land, and you can't move land out of harm's way. But under more normal circumstances, neither gold nor land are get-rich-quick investments. Quite the reverse. They're the foundations upon which other wealth is heaped. Very few people attempt to get daily quotes (even annual quotes) on the resale value of their real estate. There's a certain comfort in this obliviousness. Whether up $10,000 or down $10,000, it's still your land and it's still doing the job for which you purchased it. Gold is doing its job regardless of price also, but because the price is in your face every day, it irritates you when it goes down.--------------Why Play By Their Rules?--------------Most children who play musical chairs try very hard to stay in the game, to lunge for an available chair the second the music stops. They feel highly competitive and very much resent it when they discover that they're the ones who remain standing. I had a slightly different approach. I noticed that, on each round, a chair was removed from play along with the standing player. Not being particularly inclined to exercise, I happily allowed myself to be the one remaining standing after the first round. As a result, I got to sit down in the removed chair for the next half hour while my schoolmates continued to exhaust themselves chasing an inevitably dwindling resource. All the while, I was quite satisfied to sit on my asset.--------------No True Price--------------RossL, that was an excellent article you quoted in (11/19/99; 19:37:11MDT - Msg ID:19454). The only point Bill Bonner makes that I have problems with is the notion he and Doug Casey have of thinking they can discern a "true" price of gold by somehow squaring it up with the U.S. dollar's M1 measure.Bill and Doug are making some unwarranted assumptions. First, they assume that there is a single "true" price of gold which is somehow out there and waiting to be identified. Second, they assume that the supply of gold is somehow supposed to equate to (or take the place of) the supply of dollars.Bill and Doug made these misleading assumptions because humans tend to crave absolutes. We like fixed anchors on which to tie our lives. The only problem with that is, nothing is absolute. Everything is relative, and everything is in motion.I suspect most of you reading these words take it for granted that you're currently sitting still. But you're not. You're currently hurtling eastward at up to a thousand miles per hour. How so? Well, the earth's equator is about 24,000 miles around, the earth turns completely about every 24 hours, so a point in the Congo or Ecuador is forever moving a thousand miles an hour eastward. Points nearer the poles move proportionately more slowly, but they still move. Even when Scott was standing at the South Pole staring at Amundsen's flag, he wasn't standing still. He was slowly being turned to his right. And just when you think you can deal with that, you realise that our home planet is hurtling round the sun, the sun is hurtling round the Milky Way, and so on.Now that I've got you clutching your desk in order to maintain your balance, let's get back to gold. The United States used to stamp TWENTY DOLLARS on nearly-one ounce gold planchets for effectively the same reason that Johnson Matthey today stamps 1 Ounce Fine Gold on its wafers. Indeed, were the U.S.'s original Constitutional Committee to return and appraise the world today, they'd most likely regard Johnson Matthey and its fellow refiners as being the only remaining adherents to their original intent. The government they framed was intended to set weights and measures, not to invent a mirage out of depreciating debt.For a large part of its history, the United States defined a dollar as being about 3/4 of an ounce of silver and, at the same time, about 1/20 of an ounce of gold (the specific net weights to four decimal places meandered several times over the centuries but generally stayed around these two figures).The reason the U.S. did this was simple: your founding fathers felt that "full faith and credit" was not an acceptably firm thing on which to base a serious currency. That conviction was for the most part adhered to by succeeding generations until things began to fall apart economically in the 1920s and 1930s.Those founding fathers were not so much defining a Price Of Gold In Dollars as they were defining a new system of weights and measures, called Dollars & Cents, to go into competition with Troy and Metric. It's quite a pity they didn't simply use the Troy ounce and avoid entirely the notion of currency in terms of something else.The South Africans came close to this ideal a few decades ago with the Krugerrand, but they never thought to take the next logical step: do away with the Rand entirely and point-blank insist that all internal commerce henceforth be handled in terms of Troy ounces of gold, whether coin in hand or as electronic accounting entries for same. That would have been a real gold standard.Would it have worked? Difficult to say. Certainly it would have removed the government's ability to borrow one sum of purchasing power today, yet get away with repaying less than that sum of purchasing power in future by inflating the nominal money supply in the interim. If you borrow 10 million ounces, you'll be expected to repay 10 million ounces. With interest.Ah, but the dollar today is not even remotely the same animal that it was before 1933. The dollar is related to the price of gold only about as much as the dollar is related to the price of a McDonald's Big Mac. Hmmm, having typed that, I suddenly got this odd notion that, were Big Mac prices to be plotted alongside silver, there'd be a very consistent long-term relationship of about half of an ounce of silver per Big Mac. I'll leave the proof or disproof of that notion to some other poster who hungers for knowledge. Were it to turn out true, however, it would certainly lend credence to the argument that precious metals are the nearest we come to consistent units of wealth.Alright, I'm beginning to wander, so it's time to wrap this up.Yours,I.V. HoltzmanPS: Gandalf the White wrote in (12/11/99; 11:16:28MDT - Msg ID:20756), "Hail ORO. Please remember. it took the Hobbits a long time to understand E=mc2 EVEN AFTER they spoke with Al Einstein." Now that would make for an interesting news story... REUTERS - During a hastily called press conference at the Lord Mayor's offices in Michel Delving today, Otho Fairbairn attempted to reassure other Western leaders by promising that, "although it may now be spoken of openly that The Shire has successfully tested a nuclear device (underground naturally, where else would one do it?), we have no intention whatsoever of following this up with aggressive policies against our neighbours. Especially in reference to our sundered kindred in Bree, be assured The Shire has no plans to pursue reunification. We simply felt that it was in the best interest of Hobbits everywhere that The Shire be able to treat with its neighbours (Mithlond and New Hollin in particular) as equals."(End) Holtzman (12/28/99; 9:24:15MDT - Msg ID:21737) Observations: Part Two of Three... This might do better: the North American tectonic plate and the Pacific Seabed tectonic plate are pressing against one another all down the coast of California. Pressures so vast we can't comprehend them, yet during most days in the year there's no visible evidence in downtown Hollywood that anything ominous is brewing just underfoot. This is because the two opposing forces (friction versus sheer) are so equally matched that the net result is little if any motion. However, as Californians will I imagine freely attest, every so often friction falters and sheering forces discover they can make headway. In those brief but horrid moments, the universe changes. Foundations collapse. The very earth ripples like the surface of a pond. And then everything goes quiet again.When you look at currency exchange rates (both fiat and PM currencies included), you see much the same thing that our Hollywood resident sees: endless periods of quiet drift punctuated by brief moments of shock. Back over a year ago, everyone had gotten quite comfortable with the dollar being able to buy one more yen each week than it had the previous week. But when the exchange rate arrived at 147 yen to the dollar, it did not gently proceed to 148. Rather, it lurched back to below 120 in a matter of hours. It then resumed a meandering drift (in the opposite direction this time, however) towards its current relationship of 103 yen to one dollar.Stop and think about the implications of that. Over the course of the last year or so, the dollar price of a yen has inflated by 42%. Put another way, a dollar today only buys 70% as many yen as it bought barely a year ago.So why aren't the alarm bells sounding on Wall Street? Why aren't Americans queuing up to buy rationed Sony products as during the 1973 oil embargo? Well, part of the answer is that the y147:$1 rate of a year ago was even then considered out of kilter, and the recoil from that extreme has yet to approach the opposite established extreme at y80:$1. Put simply, although jarring, it's been deemed by the markets to have been within reasonable norms. Executives at Sony and the like came to the same conclusion and for the most part did not radically raise retail prices in dollar terms. During that same year, the fledgling euro drifted fairly steadily from its initial $1.17:e1 rate to its current nearly 1:1 rate. A dollar today can purchase 15% more euros than a year ago.And, during that same year, the dollar:gold rate has moved from approximately $290:1oz to $280:1oz. Admittedly, there were wild swings to both sides in the interim, but from beginning to end the year's net effect has been almost negligible, even in this of all years, the lead-up to the great unknown of Y2K.What this recent history tells me is that gold is rapidly reacquiring its former status, not as a get-rich-quick investment, but rather as a peer currency, on equal though different footing with the dollar, the euro, the yen, and the pound.There are two ways the dollar:gold rate can reach $30000:1oz. The first would be if all the CB gold in Britain, Europe and Fort Knox were to be rendered valueless, perhaps by having been made radioactive. The fraction of above-ground supply left undamaged would instantly be granted vastly higher scarcity value. However, outside of theatrical fiction, that possibility seems to me to be quite unlikely.There seems to be some misunderstanding about what would happen were the world were to universally abandon euros, dollars, yen and pounds and adopt a literal gold standard. Contrary to the hopes of many, the purchasing power of an ounce of gold in such a circumstance would not change much at all. It's not that the relatively fixed number of above-ground ounces would be rationed out to replace all the paper money and bank deposits. Not at all. Instead, things would simply be repriced in terms of units of gold mass. For example, one troy ounce of gold today purchases about 40 economical meals or about 20 decent meals. As a restaurant owner in Dresden currently prices his meals in both Deutschmark and euros, a restaurant owner under a newly begun gold standard would simply reprice his meals into a comparable fraction of an ounce of gold.Most people don't mentally picture paying a gold ducat for dinner for two, but that's effectively what they're doing in terms of purchasing power day in and day out even now. An average employee earns in the neighbourhood of 100 ounces of gold each year. It wouldn't have to be coin in hand from employer to employee any more than it is today. Electronic bookkeeping entries to the amount of 100 ounces of gold per annum would be periodically transferred from the employer's bank account to the employee's bank account. And the total current above ground supply of physical gold would be more than sufficient to satisfy the need for metal in hand, just as the total number of fiat paper banknotes world-wide, though a tiny fraction of fiat electronic bank accounts world-wide, is yet quite sufficient for those who need currency in pocket.So if the purchasing power of gold is unlikely to rocket skywards, in order to achieve $30000:1oz it will be necessary for the purchasing power of the other participant, the dollar, to rocket groundwards. There are many ways that might occur, but counterbalancing all of those possibilities is the concerted effort of powerful people the world over who do not stand to gain by allowing that to happen.The British pound sterling used to be the world's reserve currency. It must be admitted by even its most loyal supporters that today the pound is only a shell of its former glory. But has its demise been a hundredfold (as the dollar's demise would be if POG 300 to POG 30000 comes true)? And how long did that demise take?The original pound sterling meant literally that: a troy pound's mass of 92.5% silver. Since a pound ingot of any metal is a tad awkward for use as brass in pocket, it was for practicality's sake subdivided into 240 pennies, and one 240th of a troy pound became known as a pennyweight. Since a Troy pound is composed of 12 Troy ounces, 20 original silver pennies were precisely one Troy ounce of 92.5% silver. Half a Troy ounce, or ten silver pennies, was an original shilling. By the way, the £ symbol for the British pound sterling comes from Libra, the Latin word for a one-pound weight. The next time a child asks you why on earth the word "pound" should be abbreviated lb., you can now tell them.But my, how far we've drifted from that simpler time where money was weight. Before abandoning silver completely, the silver content of the coinage had dropped to approximately a quarter of its original. It's gone downhill ever more steeply since.I've written this next few sentences in several different ways, and so far the following is the least weird way I've found of saying it. A Troy Pound is 12 Troy ounces, and Sterling means 92.5% silver. So, a Troy Pound of Sterling ought by rights to contain 11.1 Troy ounces of fine silver and .9 ounces of something else (copper typically). The spot price of fine silver in modern-day British currency is approximately £3.20 per ounce. Times 11.1 means that a true, original Troy Pound of Sterling is to-day equivalent to £35.60 fiat British pounds (about $57 US). So we're not at a hundredfold collapse value yet, although we are at roughly 35-fold.But then there's money supply to be considered. No, not fiat money supply. Silver precious metal supply world-wide. According to an article in Forbes published a few years ago, the purchasing power of an ounce of silver prior to Columbus was anywhere from 60 to 160 times its present purchasing power. This is because a large number of post-Columbus Spaniards obliterated whole mountains (and incidentally whole cultures) in the Americas in order to increase the European supply of silver by anywhere from 60 to 160 fold.Even had the British currency system remained to this day its literal original compact of One Pound of Sterling Silver, that very same pound would have been devalued by new supply by at least 60-fold. Multiplying 60 by the already determined 35, we get at least a 2100-fold demise of the British Pound's purchasing power since inception.But that's the key phrase: since inception. The Pound Sterling was begun in the centuries following Charlemagne. Its first significant devaluation occurred nearly 800 years ago. That results in an inflation rate of less than 1% per annum. That is to say, 1.0096 to the 800th power yields nearly 2100. Certainly in some decades throughout those centuries, the effective inflation rate far exceeded that, and in other decades deflation was the order of the day. But it took centuries of gradual erosion to wear down the British Pound.By contrast, it took less than 3 years to annihilate the Deutschmark. The demise of the post-WWI German mark far exceeded a hundredfold, but then again it was not the world's reserve currency, nor even a particularly important currency within Europe at the time. The same scenario has more recently been visited on the post-communist rouble.Of a certainty, at some point in the future the almighty dollar will likewise be a shell of its former glory, but it's difficult for me to say whether that day will be in 2003 or in 2800. I am, however, quite confident that day will Not be sometime next week. In fact, I expect gold to fall and the dollar to strengthen in the early months of 2000.--------------Y2K and its aftermath--------------I'm going to do something quite uncharacteristic and actually make specific predictions (which means they'll almost certainly go wrong, but frankly I'd welcome being proved wrong on these items).I predict that there will be at least 3 time periods in 2000 when sentiment for gold on the part of goldbugs will tank. The first of these periods will coincide with soaring sentiment on the part of gold shorts.You've likely heard "Buy the rumour, sell the news" in reference to stock trading. You've likely also heard "Sell the rumour, buy the news" uttered by the same talking heads. Neither maxim successfully conveys the simple truth:Reality is seldom worse than people fear it will be.Put another way, the vision of the approaching hypodermic is almost always worse than the actual injection. That's why good nurses sneak up on their victims when their backs are turned. We've had nearly two years of watching the Y2K hypodermic approach. The "oh thank goodness it's over" reaction will be tremendous.--------------3 January 00--------------So long as no more than one nuclear missile explodes in its Kazakh silo, so long as no more than one car bomb goes off in downtown London, so long as no more than one part of Quebec is still off electricity come Monday 3 January 1999, I expect stock markets around the globe will soar and the precious metals markets will plummet.Hair-trigger computerised trades are already in place to take action beginning with the Australian All Ordinaries, then reverberating round the world as Monday progresses. Talking heads will spend all day spouting variations on, "Whew, that wasn't nearly so awful as we feared." There'll also be at least one formerly outspoken doomsday advocate willing (or being paid enough) to stand up in front of the "we told you so" firing squad to be professionally humiliated.I personally expect there will be no significant software downtimes in any of the English speaking world's crucial systems (finance, military, power supply, communications). I expect Western Europe will fare well also. I'm less certain of the CIS nations, but flaky utilities are as commonplace there as they are in developing countries. Put simply, it'll be a weekend just like any other weekend for them.The greater risk at the moment by far is millennial terrorism. Will people try to blow things up? Almost certainly. Will they succeed? Perhaps. Will it matter to financial markets come Monday morning? Probably not, unless there's a far more destructive pattern of attacks than the ex-Saudi was capable of mounting last year.As a result, I'm mentally bracing myself for a $30 down day in gold that Monday. If it happens that gold falls less, I'll at least have the benefit of being pleasantly surprised, but I find the odds of gold falling that day to be far greater than the odds of gold rising. Platinum and palladium will likely not fall much because an economy which has miraculously failed to be destroyed will still need catalytic converters for its new automobiles. Indeed, if there are any difficulties in Russia at all (Y2K perhaps, but more likely Chechnya), palladium may leap skyward. Silver, however, is likely to tank along with gold, possibly even worse on a percentage basis.Now that I've destroyed your holiday cheer, I would like to stress that I have not sold my gold, nor do I intend to. Don't panic, and for heaven's sake don't sell into this downdraft. It, like the anticipatory tensing that preceded it, is an over-reaction.(Continued) Holtzman (12/28/99; 9:21:39MDT - Msg ID:21736) Observations: Part One of Three.... Holtzman here,--------------United States of Europe? E-U.--------------FOA wrote in (12/10/99; 7:50:49MDT - Msg ID:20685), "The EMU for the UK is a done deal, if for no other reason that they will sink until they join. The big plus for them is their past and present ties to Europe makes it all feel confortable, like an old chair you have used before." Well, you might put it that way. But before anyone starts thinking of the EU as inevitably becoming an homogenous United States of Europe, I'd like to suggest that such a future is still quite a ways off.To explain what I mean, I spoke recently with an acquaintance who lives in Amsterdam who had just returned from a road trip to Bayern (southern Germany). His summation of the event was, "Germany is a lovely country. Pity there are so many Germans in it."Certainly the peoples of the U.S. have to endure culture clashes, most particularly I should imagine along the border with Mexico. Even within your majority culture, a person regarded as speaking and dressing properly in Houston is unlikely to be so regarded in Boston.But do people in North Dakota avoid standing on open ground for fear they may be shot at simply because they practice the wrong religion? Do people in Rhode Island, Massachusetts and Connecticut speak completely different languages? Did the other 49 states' combined military might just bomb the life out of Mississippi? You see now why a truly homogenous United States of Europe is not going to happen overnight.The U.S., and Russia for that matter, benefit from having one culture, one language, shared by the vast majority of the population. True, a resident of Chicago may be of Polish descent while his neighbour is of Swedish descent, but it's rare nowadays for the two of them to speak anything but American English. They cling to their heritage mainly via foods, but even there no-one finds it odd for a Swedish American to eat traditionally Polish foods.Europe and the UK are slowly trending this way, largely due to the half century of fixation we experienced whilst caught between the Cold War superpowers. For the first time since Pax Romana, war between European nations was simply not allowed. That made possible the raising of a generation who never saw their cities in flames. It broke the inherited cycle of needing to take revenge. We may still take verbal advantage of each other, and we may not be very impressed with each other, but we're not on the verge of wholesale slaughtering each other either. Still, we're a long way from We The People.In (12/10/99; 21:59:34MDT - Msg ID:20728), USAGOLD wrote, "I think military expenditure will be just one aspect of the Euro-surge. I would suggest building a brand new capital city on the border between Germany and France -- as a symbol of the new nation -- but I don't think they are looking for advice."What a keen idea. We could name the new capital city after someone else named George... Patton, perhaps. Seriously though, continental centrality is why Basel and Strasbourg are already favoured for high-level sessions, though it seems fairly certain that Brussels will retain its position at the centre of politics. BeNeLux is in many respects comparable to your Maryland, from which your District of Columbia was carved... the border you speak of between Germany and France is not historically the place where the two countries interact. Germans much prefer to visit France by marching over top of Belgium.--------------Who's afraid of the Big Bad Rothschild?--------------One thing I don't understand at all is why so many posters here seem to dread the actions of the rich and powerful. When you see a locomotive steaming towards you, do you dread it? Not when you're standing on the platform waiting for it to take you to your destination, as in http://www.trainpage.com/t000pt1/images/1264a.jpg. Not even when you're standing beside the tracks and watching in awe, as in http://www.trainpage.com/t000pt1/images/0407_mvc_007f.jpg.The only time you should dread an approaching train is when you're tied to its tracks. And you are not.Wouldn't it be a far more constructive use of time to study these powerful people with the aim of figuring out where they're going so you can hop aboard their train? They're greedy, of a certainty, and they're very keen on retaining their hold on power and wealth. But in order to do so they must participate in a world where others can benefit from their actions. As I said in a recent post, Goldman Sachs by itself is not large enough to move markets all on its own. Rather, GS must inspire others to assist it. And when that market moves, it produces change, which yields opportunity. If you've rightly anticipated GS's move and have placed yourself on the winning side of the change, you have good reasons to love and adore Goldman Sachs.That should not in any way suggest that you can take your eyes off the rich and powerful. Such people attempt to make their critical moves without warning (the now infamous ECB about-face on gold lending being the best recent example), but they're not doing so with the aim of discomfiting us. Frankly, I would be astonished if any man of significant means ever made a strategic decision with the specific aim of making life difficult for commoners. No, when such a man makes his decisions, he does so with the sole aim of outmanoeuvring other powerful people.>From the point of view of a hare crossing the tracks at night, the train is just another force of nature. While I'll even allow that the engineer might be an avid hunter in his off time, there is absolutely no chance that the man will turn his attention from his duties in order to harm this hare. In fact, the engineer will most likely never notice that the hare was ever nearby. If shown the remains later, the man will most likely express regret. The same set of attitudes apply to the relationship (or, more accurately, the complete absence of a relationship) between men of power and common men.The biggest problem hares have with trains is that they do not comprehend that they are in a dangerous location until it's too late. That obliviousness is a problem for many humans as well, but unlike the hare a human can learn to be more observant.The biggest advantage hares have is that they are small enough to evade notice most of the time. There's a hare within a stone's throw of many of you right now, and in most cases you'll never see him. This evasion of notice is also an advantage most humans have. Who are you to Goldman Sachs, or the local constable, or the Rothschild family? It's only in X-Files films that a group of darkly suited gentlemen sit in a smoke-filled room and plan out how to ruin specifically you. However, such men do make plans which cause the earth to move, and if you're in the wrong place when it happens you may well be ruined.Powerful people, like locomotive engineers, have to plan ahead precisely because their actions are too massive to stop and start quickly. As a result, such people generally have a long-term (and therefore infrequently changed) perspective because, oddly enough, they cannot afford to have a short-term or even medium-term outlook.But you and I can afford a medium-term outlook. Indeed, it's difficult for many of us to acquire a long-term perspective. When a stock advisor says, "Hold for the long term," many here become uncomfortable, myself included. But not because the long term is bad. Rather, because holding on blindly forever is no better than hopping in and out in response to every new bit of information we encounter. I refer you to the great U.S. poet, Kenny Rogers, who said, "You gotta know when to hold em, and know when to fold em."I have noticed that this fear of cabals seems to be primarily a Russian and U.S. thing. By contrast, relatively few Britons and Europeans get so worked up over the machinations of the influential. I suspect the contrast may be the result of your two nations having so far removed yourselves from hereditary feudalism. Not that we're still in the Middle Ages here. In fact, we seem to be headed your direction with undue haste. The present occupants of the House of Commons, for example, seem quite keen on turning the House of Lords into just another Duma or Senate.Still, we find it both reasonable and comforting to have some structure in our society. Though there's a natural tendency for those on the lower rungs of society to be put upon by those on upper rungs, the obligations run strongly in both directions. As much as it was a serf's obligation to take up arms when his laird commanded, it was just as surely the laird's obligation to provide that serf's family with the safe haven of castle walls during a siege. As we've gradually evolved away from the inequities of feudalism, we've managed to retain many of the benefits of it. The sudden revolts which divorced Russia and the U.S. from this system threw out the good along with the bad.One result of those revolutions is that both Russian and U.S. citizens seem to find something repugnant in the notion that the children of a successful man might wish to further that existing family success rather than start over elsewhere. We're not so ruggedly individualist as you. While in Russia and the U.S. it's the norm for a single man or woman to make his/her way in the world, here it's much more common for a family to do so. One has only to list some of Hollywood's more infamous depictions of family businesses to see the bias: Dallas, Dynasty, The Godfather. Contrast that with BBC productions filmed at roughly the same time: Upstairs Downstairs, All Creatures Great & Small.Somehow or another it's been determined in the present day U.S. that a family working as a unit must inherently be evil, though that has not always been the prevailing attitude. Note the progression from few objections over a second Adams becoming President, through some concern over a second Roosevelt, to apparently great alarm in some quarters at the thought of a second Bush.Of particular fascination for me is the U.S. impression of the Rothschild family. The best I've been able to make of it, many of you seem horrified at the thought of a financial institution being owned by several generations of a single family. By contrast, we see such a situation as a hallmark of stability. When a complete stranger abruptly becomes CEO of a U.S. bank, doesn't it concern you that he may stumble as he learns how things work at his new place of employment? Wouldn't it be far less risky for the new CEO to have been raised in that institution? We welcome hereditary continuity.And in the U.S., where such continuity is lacking, people yet crave it, though they seldom admit that even to themselves. Why else would U.S. vinyards give themselves French-sounding names? Why else would rock bands put umlauts over the vowels in their names? Why else would American furniture and architectural styles be categorised according to British monarch (Victorian, Regency, Georgian, etc.)? Why else would Americans be the majority consumers of Rothschild wines?--------------Trajectories--------------For JA, although you were addressing (12/16/99; 0:08:58MDT - Msg ID:21128) to FOA, I'd like to respond also. You said, "In summary I guess I am asking how you can be so certain that gold will vastly increase in value possibly even to $30,000 yet not be able to discuss with any degree of certainty whether it will hit $200 or $360 first?"Picture an automobile racing at full speed toward a concrete bridge footing. In which direction might the remains of the chassis proceed in the seconds immediately following the collision? Back the way it came? To either side? Up? The tiniest difference in the angle of impact will result in a vastly different outcome, and there's no way to say with any confidence exactly what this particular automobile's short-term trajectory will be.I can, however, say with great confidence that the automobile's long-term trajectory will be towards the nearest rubbish heap. Aware of the typical outcome of such impacts, I can be quite confident that the automobile will have been destroyed, along with anyone unfortunate enough to have been inside it. I gather this is why FOA feels confident in saying that at some stage the U.S. dollar will sink to the point that 30,000 of them will buy only one ounce of gold, while at the same time FOA feels no confidence at all in being able to guess where the dollar-vs-gold exchange rate may careen between now and then. But perhaps an automobile crash isn't quite the right analogy.(Continued) USAGOLD (12/28/99; 9:05:58MDT - Msg ID:21735) Today's Gold Market Report: Y2K Short Covering, Buying Extend Gold'sYear End Rally Market Report (12/28/99) Gold kept its winning streak in tact this morning posting another solid gain in early New York trading. Gold's year end rally is centered around Y2K concerns, according to Leonard Kaplan, the head bullion trader at Chicago's LFG Bullion Services. "We've got short covering in front of Y2K led by the funds and we've got some big buyers hedging Y2K troubles," says Kaplan. The Netherlands announced another 10 ton gold sale but the market absorbed it without much difficulty. That's it for today, fellow goldmeisters. See you here tomorrow. FOA (12/28/99; 8:34:38MDT - Msg ID:21734) IMF TownCrier (12/22/99; 13:16:51MDT - Msg ID:21505)Hello TC, You and ORO have opened this up. Below, I reword some of what was already said and add some things. In reality, the IMF could have just accepted a cash payment from Mexico and left gold out of that picture. Then they could revalue a separate portion of gold and issue equity to the BIS for poor country payments. This would have been much too great of a shock to the dollar system as it would openly appear that "gold" was saving the dollar! No, a slow boil allows the transition to work. See below. Also, the IMF is keeping their gold at different valuations. Profits and loses on assets need not be totally realized. Only the items mobilized. By selecting this process of "revalue after use", it sets a long term precedent that allows the ECB to "transfer" gold from it's ECBMs OR the BIS can use available CB dollar reserves to buy gold at higher rates, as needed to mark the dollar lower!ALL: If everyone does not fully understand the IMF gold deals, that's ok. The IMF managers, who for the most part have long been dollar advocates, are still fighting about the real meaning of it themselves! They make statements, then backtrack. Make more statements, then backtrack again. It's the same as when a politician makes a "clean explanation about policy" on a live camera; then realizes that by making this revelation public it may end one of his departments. Then they say's all sorts of strange things trying to cover their obvious (to them) slip of the tongue. The media falls all over the stage wires, trying to be the first to offer their assessment of the meaning of official words. In the process, the news wires are filled with conflicting, ridiculous accounts.---------------------------------------------Like this:" " "WASHINGTON, Dec 17 (Reuters) - The International Monetary Fund, raising cash to pay for debt relief, sold gold to Brazil this week and bought it back in a complicated deal." " "Too put this into true life context:Tell me this,,,,,,,,,,The last time one of you went into your bank and made a car loan payment, did any of you ever hear the banker tell his associate "Old Jim just came in and made his payment. I sure enjoy buying dollar from my customers in this fashion."Now, in IMF context:"Old Brazil just came in and made a payment on their loan using gold instead of paper currency. Yes, you heard me right! We " " brought " " gold from them"----------------------------Here is another one:First in IMF context:" " ``We sold slightly more than 7 million ounces of gold to Brazil and accepted it back immediately from Brazil for payment of an obligation due the same day,'' IMF Treasurer Eduard Brau said in a statement. ``Thus the gold did not enter the market.'' " "Now in true life context:" " " Old Jim just called and told us to use his saving account balance to TRANSFER cash into his checking account. Then he wanted us to withdraw from his checking to pay on the car loan. Thus the DOLLARS did not enter the market." " " (Didn't want anyone to worry that those dollars would be sold into the marketplace and depress it's value???)-------------------------------------------------------Get the picture? By announcing these deals in this fashion, the whole process becomes lost in a twisted logic that forces us off the trail. Just as banks make currency payments and transfers "in house", they also do it with gold against currencies. And have been doing so quietly for a long, long time. The problem with the IMF action, is that it was forced out in the open by Euro advocates, "for everyone to see". Even the congressional denial of IMF gold sales was presented as an effort to stop the price of gold from falling. In reality the IMF no longer had the support of Euro / BIS cash contributions. Without new wealth for the IMF to draw from, international dollar debts were going to fail. A process that would have quickly marked dollar assets to market. Deflation, is the word! Without new contributions, selling the IMF gold would have exposed the system. For, without gold, there was nothing else to "upvalue" for the purpose of maintaining dollar debt. And by extension, the use of the dollar as a reserve currency. Indeed, a western public, completely unaccustomed to the thought of gold being used as money, has a hard time of grasping this. Let alone understanding it in the fashion as it is reported. We think of dollars as a real value only because they continue to buy "things" at a relatively static price. All thought is focused upon the amount of gold that CBs could sell and no consideration is given to the amount of dollars that could be sold. As gold continues it's journey to becoming an official "currency in the open", the public will make a comparison of outstanding dollars to "available outstanding gold". By available gold, we mean whatever gold the physical market will provide (sell) as backing for the dollar. Not how many paper gold contracts can (be created to) back the dollar, as is currently the fashion. As this understanding advances, the leverage inherent in just one ounce of gold will cause "thinking people" to run for physical, in mass! They will forget the present day need to leverage gold using risky paper derivatives. A need created because gold was not allowed to rise to match current dollar currency inflation (perhaps 18%??) Later, physical will be seen as more than enough. Today, gold is once again being shown as an "official" wealth, currency and money asset; and it becomes such too the loss of the dollar. Onward:TownCrier (12/17/99; 16:36:43MDT - Msg ID:21217) " " "Sure, the gold value would be viewed as the equivalent value necessary for payment on their loan, but there would still remain the lender's obligation to remove the principle quantity of dollars from existence." " "ORO (12/18/99; 2:35:37MDT - Msg ID:21249) " " The IMF, acting as a bank, can issue cash in amounts equal to booked financial assets that include country bonds and loans - and gold. Gold reserves are the only way a bank can issue cash that is not backed by debt." " "ORO, TC: The IMF currently holds loan paper as assets. Once paid with revalued gold, that portion of gold is held as the new asset. It replaces the portion of the loan "taken down" with that payment. So, the dollar portion of this loan does disappear, just as in a cash payment. Yet, the dollar supply is maintained as the "cash dollars" the country used to buy the gold, is used to maintain other dollar debt. That being the "fund" at the BIS that's used for poorer countries. It was essential for the BIS to pull the dollars away from the IMF bookkeeping so as to keep the dollar floating, if you will. A destroyed currency does not float against anything and creates havoc. A floating system, "in transition" can slowly reflect new values in the marketplace. All along, this has been the goal of the ECB/BIS. Transition the dollar reserve system so as to allow dollar asset holders time to hedge. Today, this message arrives at your doorstep, on this forum. Consider it well.Further: Again, This process is a major blow to the dollar as it introduces gold back into the system. And does so by showing gold as a growing reserve currency alternative! By using gold in this manor, it precludes a deflation of the dollar system by slowly marking down the value of dollars by raising the official price of gold. And doing this outside the valuations of the paper gold marketplace In effect, new dollar inflation is not created, where as the existing dollar currency inflation is maintained and slowly becomes apparent in the gold price! Yes, rising official gold prices, in dollars, will eventually lead to price inflation, but only to the extent that "real goods prices" were not evident in our present world dollar money supply. Note: The "money pump" term ORO uses to lable this is more like a pump that keeps our system floating. Again, in Western eyes, it's wildly price inflatiobnary. Yet, in reality it only turns lose the price inflation the dollar already has built in! ORO, your view yes? No? The current dollar reserve system has hidden these "true gold prices" and "real goods prices" for many years. The above process will allow the orderly transferee out of this system without imploding the banking sector through deflation. Only dollar asset holders will lose wealth. But, as I offered before, it is wealth they never had in the first place. We own only a bookeeping entry that described what one "could buy" as long as everyone doesn't buy together. Looking closely, we can now see how "physical" gold dollar inflation will "lead" dollar goods price inflation. The end of a reserve system requires such a transition. A reverse transition most gold bugs do not expect. All of this brings us back to the present price setting mechanism for gold. The LBMA. Their entire paper gold marketplace cannot survive a return of gold as official money. Reflecting the present world dollar inflation in dollar gold prices will wreck this market and most of the mining companies that need it as a financing tool. As we walk this trail of gold, official gold transfers will first mimic the paper price. Then, they will exceed the market as they are labelled "premium trades". Then, the paper discounting will begin as "premium bullion" in the public dealer market no longer allows paper to be "marked to the market". Gold, the only investment needed for the next thousand years! FOA JCS (12/28/99; 7:44:24MDT - Msg ID:21733) Mr Gresham (12/28/99; 0:33:34MDT - Msg ID:21725) Re: InfomagicIs he/it credible? The article is MORE THAN SCARY!! PERMAFROST (12/28/99; 7:08:27MDT - Msg ID:21732) Gold... is fine. But its value and beauty is predicated by the Absolute, God, Brahman, whatever you may wish to call it. Have you made preperations for that "Y2K" possibilty as well? besides extra water, food, and gold...I will be in Constantinople 'til next year. I'll report to you on how things develop in not Y2K-ready land. You have forsaken your brothers and sisters. Gold and usury (Finance)are simply incompatible. Do not overlook the far more important moral, social, and political ramifications of which the rise of gold will only be the harbinger.Gold...it's just money after all. How about the Rest? PERMAFROST (12/28/99; 6:54:51MDT - Msg ID:21731) CONTÝNUED... Sorry for the "staccato" posting; my server keeps cutting off!In effect, a debasing of the USD will amount to a betrayal of the entire non-Western population of the world who have been goaded into accepting the dollar as money. Besides the "victory of gold" et al, would anyone care to comment on the sentiment this will develop among the Nameless billions who'll have hunged themselves by the "green bean stalk"?What will the backlash will be like, when the starving face imminent starvation and death?If (when) He returns, will it be to go back on the cross again? PERMAFROST (12/28/99; 6:26:38MDT - Msg ID:21730) Let us widen our horizons a bit... From Russia to Kosova, Casablanca to Mecca "non-American" human beings toil and kill 60 hours a week and convert their time and effort to a store of value and medium of exchange called the US dollar. To most of these people, a 100 dollars means a 1,000 or 10,000 in terms of buying power at home. A default of the US dollar will rob those poor souls of all their savings and a miserable end to their existence. Whereas the average American citizen will keep most of the goods and services he received in return for the greenbacks they exported. Oh, I'm sure bankruptcies will become expedited and the toys will be conceded to the boys and girls of the West. I'll be back with more... Number Six (12/28/99; 2:11:20MDT - Msg ID:21729) This about sums it up... Date: Tue Dec 28 1999 01:24cornucopia (Stargold And don't forget Raggio's statement on what BrigadierGeneral Ed Wheeler in Birmingham said:) ID#340233:Copyright © 1999 cornucopia/Kitco Inc. All rights reservedBrigadier General Ed Wheeler in Birmingham to discuss the Y2K status. Gen. Wheeler is one of the best informed public figures on Y2K. He has consulted 24 State Governors and Legislatures, and is on the Oklahoma Y2K Task Force. He has an impeccable 35 year career with the US Army. My first question to General Wheeler concerned a statement he made in January of 1999, urging people to stockpile at least SIX MONTHS supply of food-stuff for Y2K. I asked him if he still stood by that statement. His reply was, "I now recommend a ONE YEAR food supply". I will summarize briefly his MINIMUM IMPACT evaluation of Y2K. 1. Serious shortages of food, gas, oil, merchandise. 2. Higher prices. 3. Interruption of Services. 4. Unanticipated Disruptions. General Wheeler is particularly concerned over the status of foreign and domestic oil/gas production. Among the Y2K non-compliant segments are 1. Foreign oil fields, 2. Foreign pipelines, 3. Foreign Ports and Ships, 4. Domestic Pipelines, 5. Domestic Refineries. These all translate into a serious threat to gas and oil supplies around the world, including the United States. We are likely to see severe gas shortages and exorbitant prices. Among other concerns, General Wheeler mentioned these alarming facts: 1. The FBI has cancelled all leaves for its personnel during the roll-over. ( 16,000 FBI agents will be on duty. WHY? ) ( WorldNet Daily, 7/8/99 ) 2. Ship captains are being told to "find a port" on 12/31/99. ( Business Journal, 2/18/99 ) WHY? 3.This "non-event" is consuming hundreds of billions of repair costs ( some estimates exceed $1 Trillion ) . 4. Three US Senators have stated that Y2K could disrupt the economy of the US and the world. ( Bennett, Hatch, and Dodd ) . 5. The Federal Government has set up an underground bunker for a Y2K strategic command center near Washington D.C. WHY? 6. The US Energy Department recommended on 4/22/99 that oil be stockpiled for Y2K. WHY? ( Reuters News ) 7. The Red Cross recommends a minimum food supply of two weeks per family. WHY? 8. US Senate says that 70% of the States are NOT READY for Y2K. Alabama is 49th on the list! 9.In his State of the Union Address, President Clinton called Y2K a "big, big, problem". WHY? Mr Gresham (12/28/99; 2:08:42MDT - Msg ID:21728) Infomagic I don't think it's a hoax, though I saw that thread showing the punctuation style. Sounds just like him, and what's the point of hoaxing another's identity if you're gonna make the same points? This one's more in the economics field than the earlier; but maybe he's just been reading us and GATA all summer & fall?If rollover is as quiet as today, more time to finish preps. Stores near empty today, no lines. Thanks, everyone out there, for being so steel-nerved and saving my procrastinatin' a**!Off to bed... Sufficient unto the morrow... Number Six (12/28/99; 0:47:32MDT - Msg ID:21727) This guy got it right this year... Oil and Gold http://www.stockhouse.com/interviews/feb99/022599_timing.asp Since our February 25th interview with 13-time Timer of the Year Don Wolanchuk, crude oil had a spectacular rally, gold had a strong rally and then retreated and the Canadian dollar was mixed. Don Wolanchuk added another timing award, his fourteenth. For background on Don Wolanchuk, click here to review the February 25th interview. http://www.stockhouse.com/interviews/feb99/022599_timing.asp Wolanchuk is calling for $20/barrel crude oil and a DJIA that reaches 16,600, but just in the short-term. Longer term, Wolanchuk is calling for a DJIA that reaches between 40,000 and 60,000. ( Note: This interview was conducted late last week. ) If Wolanchuk were a crank, his advice would be worthless. He has a huge following and many profitably trade on his advice. This may be one of the more outrageous and entertaining interviews you will read this year. Just remember, he has probably won more Market Timing awards than anyone else. What if he's right? Let us know your thoughts on BullBoards. Go there now! SH: So you got lucky with your last call on oil? Wolanchuk: Excuse me, if it was luck, then it would be a 50-50 proposition, and I would only be right 50% of the time in Timer Digest, now wouldn't I? Come on. SH: What is your latest opinion on oil? Wolanchuk: Oh, oil's going to the moon. SH: You mean it's not going to correct here? Wolanchuk: Well it might correct because it ran into resistance and everybody woke up this morning and discovered oil. The lows should be in, but of course it will not go up in a straight line. SH: Well they say there's going to be trouble at the $15 level.. Wolanchuk: Yeah, well that's the resistance, that's the halfway point between that big high that we had a number of months ago and the recent low. We're going to the moon. SH: Really? It's going above $20 a barrel? Wolanchuk: Oh yeah. SH: Above $20 a barrel!!!!!????? Wolanchuk: Yes sir. Above $20. You know, this is the same kind of reaction that I got in 1987 when the Dow was at 1,600, after we crashed, and I said we're going back up above 3,000. And I got these astounded questions. SH: We're not saying impossible, it's just contrary to what every analyst has been saying today. Wolanchuk: Well of course! If every analyst was right, then there wouldn't be any Wolanchuk would there? But you've got a huge economic boom coming that is going to propel all the commodities through the roof. SH: And gold? Wolanchuk: Gold, oil and lumber. SH: What's a short term target, let's say, from now to June on the price of oil? Wolanchuk: Oh now we're getting off of timing. It has nothing to do with timing. I can guess, but it doesn't have anything to do with what my job is. That's to buy the bottom and sell the top. How long it takes to get from A to Z is not important, unless you're in a hurry. We put on a position and just ride it like a bucking bronco. It's gonna buck back and forth all the way up to above $20. SH: The uniform opinion seems to be that oil prices and gold prices won't rally until the second half of the year. Wolanchuk: They're not market analysts. They're just guessers. SH: So you think the rally will continue through the spring and the summer? Wolanchuk: The rally will continue through your lifetime until oil gets so expensive that you can't drive your cars anymore. You'll have to go out and buy the replacement cars, and those are electric cars. Remember thirty years ago, you could drive a racecar on the street and have a drag race from any stop light. You can't do that today. The streets are too crowded. And what's everybody driving? They're driving these gas-guzzler-yuppie-assault vehicles. And Ford's building one: it's 4 tons and 9 yards long. And they are getting bigger and bigger and bigger. The economy is just going into this eruption. Everybody has a fleet of cars and SUVs and all kinds of things. Gas is cheap, but it's going to get more expensive. Eventually the cycle will complete itself and react. Instead of having itty-bitty little cars, we're going to have an army of monstrous gas-guzzlers. The end result will be a switch to electric powered transportation. And that's why GM through Delphi spent millions with Valence Technology [NASDAQ - VLNC] in research and development in getting the next generation battery technology ready for General Motors' big plunge into electric vehicles. And that's why Valence Technology is the buy of a lifetime. They've got the next generation battery technology all wrapped up. This tells me that there's something bigger afloat than what meets the public eye. It's public knowledge that Delphi put a lot of money into Valence, but they all forget about that. California leads the country in changing the environment by having everybody driving electric vehicles in the years ahead, and it's just going to happen. The whole world is going to be swamped by these huge gas-guzzlers. It's happening before our very eyes. I live in a city ( and ) you can't even move it's so crowded. Twenty years ago I could drive my race car and go drag racing on the street, and now I've got to wait until 3 in the morning to do it. Then end result should be a massive move to efficient electric vehicles. SH: After our last interview, you were very accurate about gold going higher? Wolanchuk: With a worldwide economic boom of monster proportions dead ahead, you're going to have a huge inflationary spiral. The price of everything is going to go crazy on the upside. You've heard the expression "Mongol Hordes?" Those hordes of Cossacks - that's what's going to fuel the world wide explosion of free enterprise, because all those people are emerging from this huge socialist/communist order and turning into untold millions of big spending capitalists. SH: Are we talking next year two years from now, five years from now or are we talking about gold breaking out of its trading range this year? Wolanchuk: Gold is on its way. All you've got to do is be long the metal. You don't really care how long it takes because between now and the time it reaches wherever it's going to go, most of us are going to be dead. Just like when people bought it at $30/ounce in the 20's, most of those people are dead. But they were all worried, "When is gold going to do this and do that?" But it's not important. Some people are going to live longer than others and take advantage of whatever it does, but the important thing is direction. SH: But you said it was at the end of a 17-year bear market. Are we looking at sideways trading for the next 5-10 years? Wolanchuk: No, it was basically sideways for the last 17 years. It dropped down hard and then went sideways. SH: Are you talking above $400/ounce sometime in the next 2 years? Wolanchuk: I don't understand why this focus on 2 years, 1 year, 7 years. SH: Well, one could say in the year 2025, gold will be…. Wolanchuk: In the foreseeable future, I see gold back up above $800 an oz. SH: How do you define foreseeable? Wolanchuk: I don't think much about that. When I said we were going to the moon in August 1987, I thought maybe we'd see a 10,000 by 1996. So it's happening here 2 or 3 years later than I expected it. The last ten years went by so fast nobody cares about that. If they stayed long, they're happy. But if they buy something and say, "Well, it's gonna take 10 years," then they'll be less inclined to buy it than if somebody was convinced it was going to happen 2 years from now. SH: Do you see gold possibly going to where Goldman Sachs projects, which is something like sub-$250, in the foreseeable future? Wolanchuk: It's my opinion wire-houses don't know anything about markets. And if they do, the pronouncements that they make will be for the sole benefit for their back rooms. The pronouncements that wire-houses put out are to get the public to do things that their back room wants to take advantage of. So if a Goldman Sachs puts out a public announcement that gold is going to go down to $250 dollars, it's my opinion that they want their customers to sell. Why? Because the back room wants to own the stuff. SH: So you don't see gold moving in that direction? Wolanchuk: Gold is going to the moon. Gold is sold out. Argentina bailed out of gold. They bought bonds - right at the peak in bonds and right at the bottom in gold. The Swiss did the same thing. There's nobody in this gold market except probably the U.S. government. They always do things right. Just like when they told people, "We're going to be making gold coins and offer them to the public 12 months from now." That's when gold was $400 an ounce. So they ran gold up to $500 an ounce just in time to dump all the gold on the public. The public was convinced that gold was headed a lot higher. And of course the public bought it hook, line, and sinker and the rest is history. They ( the public ) loved it ( gold ) at the top, and they hate it at the bottom. SH: By the end of the year, will gold be higher or lower? Wolanchuk: Well sure it's going to be higher. But don't ask me where it's going to be in 12 months. Nobody can answer that question. Number Six (12/28/99; 0:38:23MDT - Msg ID:21726) @Mr. Gresham Yes - Nymphomagic - LOL! - Wish I was in that predicament!There is a school of thought that this may be a hoax.Apparently_the_original_IM_empahasised_words_like_this_...Oh yeah,Kaplan reminds me of Stratfor - y2k to them both is a Japanese zip company... so much for highly paid analysts... Mr Gresham (12/28/99; 0:33:34MDT - Msg ID:21725) Infomagic the Goldheart http://x26.deja.com/threadmsg_if.xp?AN=565458822&CONTEXT=946339034.1942290455&thitnum=6 Well, Number Six, you're on the ball. I've been reading it over the last hour -- you posted it right away, I'll bet.I can't remember now -- did I get the link from here or TB2000? Oh well... I love the bit about Nymphomagic -- he's been livin' large."In reality, the situation is much worse. In most cases, we no longer have the capacity to replace the failing systems with manual operations. This means that when a system fails we lose not only its productivity gains but also the entire underlying economic activity itself. In addition, because of the interconnected nature of all economic activities, only a fairly small percentage of failures is needed to cause a near total failure of all global economic activity (as described in Charlotte's Web). Exactly what the critical failure rate is nobody knows, including myself. But I am certain it is far lower than the 65% global system failure rate I am expecting (averaged from 90% failure rate for governments, 30% for big business and 70% for small business). I suspect the critical rate is about 15%, but that's probably academic now, since such a low rate is no longer attainable." Number Six (12/28/99; 0:24:20MDT - Msg ID:21724) Another BOE Scenario... The link by INFOMAGIC is a corker! :o) http://x26.deja.com/threadmsg_if.xp?AN=565458822&CONTEXT=946339034.1942290455&thitnum=6 The nudge-nudge, wink-wink answer is that the BOE is covering for one or more deeply short members of the LBMA ( London Bullion Merchants Association ) . Bravo Sierra. A G5 nation doesn't put up half of all it's real money just to cover a few banks. It doesn't have to. It just prints more paper and takes the inflation hit, as America has done time and time again. No, a bailout of this magnitude is only done for another nation, and a very close ally at that. The only nation close enough to Britain to receive this kind of special treatment is the United States. In fact, a bailout of this size isn't even likely for a close ally, just on it's own merits. Even if Bully Blair does owe his temporary Downing Street address to the Klinton Machine and to campaign funds provided by Goldman Sachs ( the villain of the Ashanti gold mine disaster ) . Such a bailout could only occur if Britain itself is also in deep monetary trouble. All of this will come out in the bubblegate trials but, in the meantime, the most logical conclusion is that the US Treasury and/or the Federal Reserve and Great Britain are heavily short of the mellow yellow metal. Number Six (12/28/99; 0:18:22MDT - Msg ID:21723) The guy is a moron... "a final commoditiesselloff, led by crude oil;"He is in his own twilight world.Kaplan can do no wrong - he is INVINCIBLE.....[he's never heard of y2k - too "contrarian" for him...]I wonder if he's read the TAVA and NIST reports on Oil - Global and USA Status??? Netking (12/28/99; 0:12:50MDT - Msg ID:21722) Gold softer again early next year? Copied from Mondays 'Gold Mining Outlook';QUESTION: "Why did you not recommend purchase of gold mining shares when they bottomed in mid December?ANSWER: I believe it is likely that both gold and its shares will make a final, deeper bottom in the first quarter of the year 2000, quite possibly inearly March. There are too many events that have not yet transpired which are likely to lead to a final drop in the price of gold: a final commoditiesselloff, led by crude oil; a final strong accumulation of gold by commercials when the yellow metal makes its final move below $280 (and quitepossibly below $270); a much lower bullish sentiment reading on gold from Market Vane, probably under 20%; a final wave of selling by those whojumped on gold's bandwagon during the early autumn spike; the realization that Y2K did not amount to much after all; the typical decline in goldshares that accompanies the earliest stages of a bear market in U.S. equities; the typical decline in gold shares that accompanies the earliest stagesof a rally in U.S. Treasuries; and the completion of the final right shoulder around 58 in the extended bullish reverse head-and-shoulder pattern in theXAU" ---------------------------------------------------------------------------------------------------------------------------------------------------------Zenidea/Number 6 - They should instead be selling all they can if the above predictions come to pass for early next year right? OK4Y2K - NetKing Click Here to view yesterday's discussion.
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